Streaming Shifting The Industry For Labels and Artists

[UPDATED] SongCast’s Mike Wright explores how the culture of music consumption has shifted from one of ‘ownership’ of content, to one of on-demand enjoyment, and how this change is impacting the entire industry, and how labels and artists choose to distribute their music.

We’ve seen the trajectory from tapes, to CD’s, to mp3’s to iPods, but now we’re moving into streaming, instead of simply “ownership” of the content, and listeners want on-demand enjoyment. The industry changes typically just meant record labels had to shift their distribution strategy by offering a new type of product. But not, the whole industry is turning on its head.

Following the trend of other businesses that promote a straight-to-consumer model, I’m seeing a shift in how artists deal with record labels. With the advances in streaming, artists can go the route of making their work directly available through streaming services. This move cuts the label out of the equation. And the future will likely see artists launching the content right to consumers, which will fully cut out both labels and streaming services.

Currently, music services such as iTunes, Pandora, and Spotify dominate. There’s really a limited need for physical products. Shop for a 2018 model car and you won’t likely find a CD player slot. For artists, the music services mean they don’t need the record label for distribution. Pandora can be used by listeners in Holland, there’s no longer a use of a country-by-country launch. The labels have seen the writing on the wall and are making deals with the music services in order to get a piece of the business. Where does this leave the artist? They’re back in a situation where the label exerts too much control.

The next step will be for artists to forge ahead on their own, by ignoring the music service-label conglomeration. Artists are already using their own apps to release exclusive content to fans, so it’s a small jump to a direct artist-to-fan relationship. I’ve been in this industry a long time, and we’re at a point where all three parties (services, labels, and artists) are locked in a battle for the consumer. We’ll quickly see which model triumphs, whether that means freemium, advertising-supported, or subscription-based listening models.

There are some artists such as Taylor Swift that can hold out until they get the deal they want. She launched “1984” on Apple Music, and there was no distribution unless she was paid appropriately. She took a stand for independent artists and became a hero. Of course, “Tay-Tay” is an outlier who racks up sales of physical products despite the overall decline and can dictate the terms of any agreement.

For independent artists that have great talent but with a fraction of a big name’s clout, they really need to watch being fleeced. It will take collaboration and solidarity among artists before they can maximize their value. This will force the hand of the platforms who won’t have a choice but to cooperate. I envision managers at YouTube panicking over losing content due to royalty percentages. Then they’ll lose out on the massive millennial audience that uses it as their main content source. Spotify, Apple, and Pandora will then jump in to grab that market share. Why take this competitive risk due to fractions of a cent royalties?

The streaming outlets do hold some cards. They have “data” which artists can use to target their current and prospect fans. Streaming platforms use their data as a bartering tool, especially in regards to how data can impact money-making touring.

Underneath all of this is a fundamental change. The listener expects to hear the music they want, when and where they desire, and they don’t want to pay for it. It’s beyond listening to music on iPods and phones, with connections on planes, TV, and even Alexa offering instant music access. There’s a lot of disruption and change, and platforms, labels, and artists will have to work it out.